Petrol Pump Dealers’ Commissions Hiked By Up To 55%

State oil companies have increased the commission for petrol pump dealers by up to 55% under a revised formula that accounts for higher staff wages and, for the first time, the return on investment in land used for the filling station.

“This is a good move by the government and oil companies. The decision will mainly benefit lowselling retail outlets, many of which were running on losses,” said Ajay Bansal, president of All India Petroleum Dealers’ Association.

Indian Oil Corp. declined to comment for the story. Bansal said the commission hike is with effect from August 1. It wasn’t clear if fuel prices reflected the increased commission.

The price of petrol was Rs 65.40/litre in New Delhi on August 1, 14 paise higher than the rate on Monday, according to the Indian Oil website.

The price of diesel was 8 paise higher.

The commission revision involves a complex formula, allocating a higher commission per litre to lower-selling outlets, Bansal said. It has for the first time factored in the return on investment in land owned by dealers, he added.

For selling 170 kilolitres of fuel, a dealer will now earn an additional commission of 63 paise a litre.

If the dealer also owns the land on which the filling station stands, the commission will go up by another 20 paise/litre.

Earlier, the dealer earned Rs 1.52 per litre.

The increase in commission is less for an outlet with sales exceeding 170 KL than for those selling a lower quantity, Bansal said.

The revised formula takes into account the minimum wages set by the Central government. Earlier, the companies took an average of wages fixed by the states, which was lower than the Central government’s wages.
The commission varies with the location of pumps.